Who must comply with Design and Distribution Obligations (DDO)?

Issuers and distributors of retail financial products must have a Target Market Determination (TMD) and distribute consistently with it.

Part 7.8A of the Corporations Act requires issuers and distributors of retail financial products (including credit) to make a target market determination (TMD), distribute consistently with the TMD, report significant dealings inconsistent with it, and review TMDs periodically.

Applies when the business has issues products or an ACL or APRA regulation. Where the business has an AFSL or credit activity, check whether you issue or distribute retail financial or credit products.

How the regulator frames it: Issuers and distributors of retail financial products and credit products.

What triggers it: Issuing or distributing in-scope products.

Jurisdiction: Commonwealth law, so the test is the same in every state and territory.

Outcome across the 35 industries Rules Mate maps (3 of 35: yes; 1 of 35: only if a further fact applies; 31 of 35: no).

Structure does not change the answer in the 4 industries it can reach: for every structure the answer is "depends on size or structure".

Size does not change the answer in the 4 industries it can reach: at every size band the answer is "depends on size or structure".

Each line is one run of the Rules Mate applicability engine for a single business profile, with the reason the engine gives:

• Pty Ltd company in banks & adis with 6–19 employees, turnover $1M–$3M: applies. ADI — APRA-regulated.
• Pty Ltd company in real estate agents with 6–19 employees, turnover $1M–$3M: does not apply. Requires issues products or an ACL or APRA regulation.
• Pty Ltd company in credit licensees & mortgage brokers with 6–19 employees, turnover $1M–$3M: check whether it applies. applies only if you issue or distribute retail financial or credit products.

Starting from a small or large professional services company that does not otherwise meet the test, each of these single facts changes the engine's answer:

• The business holds an Australian financial services licence (AFSL): it becomes worth checking, because it applies only if you issue or distribute retail financial or credit products.
• The business holds an Australian credit licence (ACL): it then applies (ACL holder).
• The business provides credit to customers: it becomes worth checking, because it applies only if you issue or distribute retail financial or credit products.
• The business is regulated by APRA: it then applies (APRA-regulated).

The engine shows this obligation as "check whether this applies" when a business has an AFSL or credit activity. It then applies only if you issue or distribute retail financial or credit products. That fact is not something Rules Mate can infer from industry, structure or size.

When due

Continuous; TMDs reviewed periodically and on trigger events.

Frequency

Ongoing

Evidence to keep

Documented TMD, distribution monitoring data, significant-dealings register, TMD review records.

Status

Current

Priority

Critical

Maximum penalty: Civil penalties to the maximum financial-services regime ($18.2M / 3× benefit / 10% turnover)

Rules Mate has not yet classified the audit or assurance level for this obligation. Any audit, review or certification requirement is set by the regulator source listed below.

• ASIC v American Express (DDO breaches) (2024): DDO mandates active distribution monitoring + TMD review on triggers — broad TMDs not sufficient.

If this obligation applies to you, so does this one: the engine uses the same rule for each.

• Design and Distribution Obligations (DDO) — RG 274

• Ban on conflicted remuneration (FOFA): AFSL holders and representatives must not accept conflicted remuneration in connection with retail financial product advice.
• Best interests duty for financial advisers (s 961B-G): Personal advisers must act in client's best interests + meet related obligations.
• Comply with AFSL general obligations (s 912A): AFSL holders must do all things necessary to ensure financial services are provided efficiently, honestly and fairly.
• Hold AFSL with derivative authorisations (margin lending + CFD + binary): Issuers of OTC derivatives to retail clients face product intervention orders + tightened conditions.
• Lodge a prospectus for offers requiring disclosure: Offers of securities to retail investors require a prospectus or OIS lodged with ASIC.

Across the 1,890 business profiles Rules Mate evaluates, these obligations apply to most of the businesses this one applies to, and are far more common among them than among businesses generally:

• Comply with APRA CPS 220 (Risk Management): applies to 100% of the same businesses (11.7× the overall rate)
• Comply with APRA CPS 230 (Operational Risk Management): applies to 100% of the same businesses (11.7× the overall rate)
• Comply with APRA CPS 234 (Information Security): applies to 100% of the same businesses (11.7× the overall rate)
• Comply with Financial Accountability Regime (FAR) accountability obligations: applies to 100% of the same businesses (11.7× the overall rate)
• FAR deferred remuneration arrangements (40% deferral 4 years): applies to 100% of the same businesses (11.7× the overall rate)

Rules Mate tracks 17 published obligations tagged "financial services", 12 of them rated critical. For a professional services Pty Ltd company with 6–19 employees operating in every state, 0 of those apply outright. This obligation is rated critical priority, and is an ongoing duty.

Regulated by Australian Securities and Investments Commission.

ASIC: Corporate regulator administering the Corporations Act, financial services and credit licensing (AFSL/ACL), markets supervision, insolvency, and registries (ASIC and ABRS).

• Australian Securities and Investments Commission

Corporations Act: The foundational federal Act for Australian corporate law.

• Corporations Act 2001

Free tools that help with this obligation:

• CPS 230 readiness scorer
• CPS 234 readiness scorer
• Reportable situations timer